Marcia Pledger: Merrill Homes optimistic about custom home sales in hot Duval housing market

Adam Merrill grew up working with houses, from doing handyman jobs for his father in property management as a teenager in Gainesville to owning his own Jacksonville-based custom home building business.

He studied building construction at the University of Florida and worked for other home builders before launching John Merrill Homes, a company that builds on its customer’s land. At prices that range from about $800,000 to $2 million, the six-year-old business generally builds custom homes near the water, whether it’s a marsh or riverfront.

Unlike production builders that build in communities, custom home builders spend more time on each project and often work on fewer than 10 homes a year.

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It’s a niche for sure. But like so many other entrepreneurs in different fields, Merrill said that nothing could have prepared him for when the pandemic first hit.

“I was going to work every day, but for two months there was zero work. Work just stopped. It hindered us,” Merrill, president of John Merrill Homes LLC recalled. “To be successful in the construction industry you have to complete work in order to collect money.”

Several months later the company started getting busy again on the sales side.

But just because the phones were ringing again, didn't mean that the pandemic didn't continue to cause Merrill problems. Soon after returning to job sites, his company started seeing a slowdown in the delivery of materials and appliances. At the same time, he underestimated cash flow challenges.

“There’s always a problem because materials come from everywhere and you need a lot of materials to build a house, from concrete and drywall to tiles, wood, and flooring,” he said. “Suddenly we started getting used to hearing people saying things like, sorry but you can get it for five months.”

None of the nine employees had to be laid off. Fortunately, the company was even able to hire someone thanks to the government’s paycheck protection program and a loan from VyStar Credit Union.

Duval County real estate market is hot

I reached out to Merrill because as a newcomer to Florida, I wanted to know how a smaller home builder is adjusting to working in a thriving home-building market, despite challenges from the pandemic. Those included homebuyers frustrated by project delays because of waits for everything from financing to materials.

Real estate sales can take weeks or months to be recorded and collected. But according to the latest data made available through realtor.com to the USA Today Network, the median sales price for a single-family home in Duval County during January was $291,500. That's an increase of 24 percent compared with January 2021.

And even though the housing market is beginning to show signs of stabilizing and moving forward from the pandemic, if you’re a buyer at the initial stages of the process, the best advice from experts is to exercise patience.

“We’re in one of the hottest markets in the country, and we end up becoming a small guy in the industry,” Merrill said, noting that his company is currently working on eight homes but has built 12 each year in the last few years. “We have a lot of relationships, but it’s still hard.”

“The whole industry has adjusted though. Building inspectors are laxer based on so many challenges. They understand the issues,” he said.

Merrill said he's learned a lot of lessons in the last two years.

“The pandemic forced us to understand what products to stay away from. We have to communicate with customers differently as a result. For instance. we might have to push a customer to a different type of flooring because maybe their first choice is a product made in Vietnam and we know it’s going to be hard to get. Everything depends on shipping and it’s so unpredictable.”

This year the company has been busy on the sales side. And even though Merrill said that seven months feels like the new normal for waiting for some materials, at least now previous experiences have helped with planning accordingly.

“Finding labor is still a problem. It’s hardly a new problem. It’s been going on for about 20 years, but the pandemic made it even harder."

Communication is critical

Corey Hacker, director of events and programming for the Northeast Florida Builders Association, said that the organization offers a custom builders and remodelers council. Since the pandemic started, the council, which also supports charitable causes, has become more of a support group that allows members to share experiences about issues like sudden material and contractor price increases and labor shortages.

Hacker is a fan of Merrill Homes because the company built her family's custom home two years ago. The project was completed right before the pandemic hit. Thankfully, she said it was seamless because the company went out of its way to stay in touch, including using an app that allows customers to check on the progress of every aspect of the process.

“Part of the beauty of working with Adam is that he’s so flexible and does what he can to make the client comfortable during the building process which can be very confusing and frustrating if you’re not working with the right builder,” Hacker said. “They’re just honest and great people. From the design process to the actual build, everything was seamless."

Home builders are optimists

“I think that home builders, in general, are optimists, at least that’s what I’ve found from the real estate groups that I'm involved in. Most of us wouldn’t be doing this if we didn’t believe that tomorrow will be a better day," Merrill said.

"I like to be optimistic. The market is always fluctuating and everyone thinks they can predict it, but nobody can,” he said.

Merrill said he does his best to keep up with housing trends. He’s a fifth-generation Floridian who has family members with experiences that range from working in orange groves to selling land. His grandfather, John Merrill, started a real estate business in 1954. As John’s only grandson, Adam grew up working around the real estate office at a young age, helping his father with home repairs for the family’s property management business.

Merrill says he works hard to uphold family values of professionalism, honesty, and integrity with his own company. He started the business after serving as building company president at Jacksonville area Arthur Rutenberg Homes franchise custom home building business. His wife, Dana, a realtor of 19 years, has worked with him for the last two years.

These days, Merrill takes note of trends like a growing number of builders focusing on building home communities that target people age 55 and older. He said his customers tend to be retirees.

“The majority of people we build for are downsizers or retirees. I feel that there’s going to be enough work even if the market retreats,” he said. “I’m sure that we will be ok for the next 10 to 15 years because Jacksonville is really an underdeveloped city. You can drive an hour and a half and still be in the city.”

This article originally appeared on Florida Times-Union: Adam Merrill shares homebuilding lessons learned during the pandemic